One of the first cannabis crops at Freedom Cannabis is growing within strictly controlled circumstances. Graham Hicks / Postmedia
Don’t get carried away.
Despite much wishful thinking, Alberta’s brand-new legalized cannabis industry is NOT going to replace oil and gas.
Alberta produces and exports 3.7 million barrels of oil and diluted bitumen PER DAY – at roughly $50 Cdn. per barrel, that’s $185 million PER DAY, or $1.3 billion PER WEEK.
The federal government estimates total cannabis retail sales (legal) for all Canada this year will be around $726 million.
Even if we double that number, for spending on wholesale cannabis production, greenhouse construction, legal and accounting services, even if we add on the salaries of some 2,000 cannabis retail store employees and maybe 1,500 cannabis greenhouse workers … it’s the equivalent of – at most – two weeks of provincial oil and gas gross revenue.
That said, the emerging cannabis industry is having economic impact — especially when greenhouse operations set up shop in smaller centres. An extra 30 to 50 skilled jobs in Olds, or Edson or Lac St. Anne is a big deal, as is new commercial/property tax coming into the municipal treasury.
Students, this is a good time to study horticulture, biochemistry or agriculture. This industry, no matter the initial shakedown or future consolidation, needs plenty more expertise.
And it’s fun out there! The industry, barely a year old, is a regulated Klondike Gold Rush!
Dozens of Alberta entrepreneurs, many of them ex-oil company owners who sold at the right time, have successfully met Health Canada’s strict licensing rules, have persuaded their friends, relatives, investors and investment funds to sink a little spare cash into growing, processing and selling cannabis.
On the retail side, Alberta Gaming, Liquor & Cannabis will license a total of 250 retail cannabis stores by the end of this year.
What’s the demand? There’s lots of educated guesses, but nobody’s quite sure. Heck, “edibles” are predicted to be more popular than smoking cannabis, but until approved by Health Canada this coming fall, not one cannabis brownie has been (legally) sold.
Everybody knows the CBD ingredient in cannabis has great medical potential. It’s already proven to alleviate pain. But nobody knows (yet) the size of that market.
Nobody knows, on the retail side, which types of recreational cannabis, which “brands” will prove to be the most popular, where prices will settle. Some growers could shutter their doors because their products don’t sell. Others could be sold to an expanding competitor.
The risk is high. But the odds, for good operators, are good.
Freedom Cannabis – in a converted Acheson Industrial Park warehouse – has invested $40 million so far, but all it has to show (at this point) are the first harvestings of cannabis “buds” from the greenhouse start-up.
Once production gears up, from 3,000 to 4,000 kilograms of product this year to 15,000 to 17,000 kilograms, once Freedom’s phase two is built and operational … if wholesale prices stay at $5,000 to $6,000 a kilogram, that’s gross annual revenue of $15 million to, theoretically, over $100 million.
Meanwhile, upstairs, Freedom Cannabis is creating a laboratory already booked for future research projects with academic experts, and a commercial kitchen for the above-mentioned “edibles” (Health Canada will confine the commercial creation of edibles to kitchens inside greenhouse facilities.)
It’s risky – but rarely has such brand-new business opportunity emerged, hence the intense competition and inevitable consolidation and culling of those operators.
In and around Edmonton are some eight licensed producers – including the enormous Aurora Sky cannabis greenhouse facility at the International Airport with some 400 employees.
Alberta’s growers and retailers, despite the inevitable start-up hiccups, are praising the Alberta/Canada regulatory framework. Like alcoholic beverages, all cannabis goes through the AGLC warehouse before distribution to retail cannabis stores. Licensing, quality and safety standards, dictated by Health Canada, are giving Canadian cannabis an excellent international reputation. That’s a real asset when developing overseas markets and new products.
This is all good, very good.
But, please, despite the optimism of the newly formed Alberta Cannabis Council, don’t view recreational and medical cannabis as Alberta’s economic savior.
It’ll help our ailing economy, but convincing the world that Alberta’s modern, clean oil and gas is a solution to global warming is much more important.